Minimum wage vs living wage

Over the past few month there has been much discussion surrounding minimum wage, with several companies being publicly slammed for not offering employees the minimum offering. Consequently, this has sparked the debate of minimum wage versus living wage with many arguing that the minimum wage is not sufficient and does not meet the cost of living. In retaliation, larger organisations including Barclays, British Gas and Waitrose have started to pay their staff a living wage.

So what exactly is the difference between the two? The minimum wage is set by law and varies depending on an individuals’ age where as the living wage is based on the cost of living is specific areas. Currently the minimum wage for those over the age of 21 is £6.50 per hour and the living wage is currently set at £7.85, equating to £1.35 per hour difference. In a standard 37.5 hour week this could equate to an additional £50 that could be earned. For some people, this extra £50 a week is the difference between paying bills on time and not.

Surely then minimum wage should cover the cost of living? In an ideal world everybody would be paid the living wage and recent research demonstrate that with a majority of organisations paying the living wage, the government could actually save up to £2billion each year.

However, the counter-argument is that in this day and age, we have become accustom to a higher standard of the basic of living. Other arguments in support of the minimum wage include that raising the minimum wage would lead to job losses as smaller companies simply wouldn’t be able to keep the same number of staff at the higher wage.

As of November 2014, there were more than 1,000 companies paying the living wage who are accredited by the Living Wage Foundation which include companies such as Aviva, Barclays and Legal & General. However, the consequences of paying the living wage are being felt across a number of businesses, including Café Nero who have stopped offering free food to staff in order to keep up with the cost of paying the living wage.

What are your thoughts? Do you agree that more companies should be paying the living wage? I’d love to hear your thoughts in the comments below.

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